Insurance sold to us by bank Life/Contents etc

J

jobseekr1

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Hi folks,
Have a mortgage, and going through some associated costs and looking for a bit of clarity regarding the difference between different policies we were sold during the boom years by a bank, and what each one provides.
Payment Protection – I understand this is mandatory, and my understanding of this one, is if the insured dies the balance on the mortgage is paid?
Home insurance -The cover on this is 20k via Allianz. This is coming in at circa 14 euro per month. My understanding is this covers fire etc/burglary..What are the important additional benefits to check to see that we have?
We are apartment dwellers and a friend said we didn’t need this as block policy covers us? Is this the case or not?
Life Assurance – This is the confusing one, I understand if the insured passes away again a mortgage is paid out, but if that is the case, why would we have been sold protection too? Or is it in this instance that term life insurance or whole of life insurance would have been sold to us.
I rang the bank through whom we got the mortgage, and they just gave us the numbers for three separate insurance firms Irish Life (Life Assurance), Allianz (Home insurance) and Genworth (Payment Protection), and told to contact each one etc which is fine, but the Life Assurance appears especially expensive in excess of 20 euro.
Is the Life Assurance a lot? Our loan/outstanding mortgage is relatively modest to other boom time ones.
 
You're all confused :)

Payment protection is not mandatory and does not pay off your mortgage, it pays a set amount (whatever you insured for) towards your monthly repayments for normally up to a year in the cases of accident, illness or redundancy (in general, there can be a few variations)

Home insurance - what you obviously have is contents insurance, as you have an apartment the walls etc are covered under the block policy but your personal contents are not so if you want your stuff covered then you must have contents insurance.

Life insurance/mortgage protection/term insurance - all these terms are used but basically this is mandatory cover and is to pay off the full mortgage should the mortgage holder die. No way of knowing whether or not your premium of 20pm is expensive, it doesn't sound it, but one would have to know ages, term of mortgage, amount, smokers? etc before you could compare. There is not a hope that is a whole of life policy for that money, it sounds pretty bog standard cover but again without knowing what is covered it's hard to know. Lots of online sites where you can look for basic mortgage protection by inputting your details and getting an idea of price.

Your life cover is with Irish Life, the contents cover is with Allianz and the Payment Protection (not life) is with Genworth and is probably the least beneficial of the three as it can be hard to claim on.
 
The only compulsory insurance is the Mortgage Protection insurance, which you call Life Assurance. The Consumer Credit Act requires that you have this so that if you die, the mortgage will be paid off. You should shop around for a quote as it's extremely unlikely that the bank got you a good quote. Try LABrokers.com or ferga.com

The payment protection is not mandatory and is usually a terrible product. This pays your premium if you lose your job. But it is often mis-sold e.g. to self-employed people who can never claim or to public servants who are unlikely to claim.

Your building is covered for fire and damage through the block insurance, so you don't need to pay for this.

If you want contents insurance, you would have to pay for this yourself.

Brendan
 
As others have stated mortgage protection insurance is mandatory and pays off the mortgage in full if the worst happens. Mortgage lenders make this mandatory as a term of getting the mortgage so they are protected themselves. Perhaps this is what you meant by payment protection, but that name actually means something else (see below). Mortgage protection is a special type of life insurance. It should pay off the mortgage in full should you die but, as you are hopefully paying off the mortgage yourself, the amount it needs to pay out gets smaller and smaller unlike usual life insurance which stays the same (or even increases to offset inflation). You can get regular life insurance (which doesn't decrease in cover amount) and mortgage provider will accept that instead as, as long as mortgage is protected they're happy, but it's more expensive. Mortgage protection insurance, because it is mandatory, is usually offered by the mortgage provider which may seem like a good idea and easy to sort out at same time, but is often more expensive than buying separately.

Payment protection insurance (aka PPI) continues paying something like your mortgage or some other regular fee for a bit if you lose your job but usually only for a set time and often with strict conditions. Usually bad value for money though nice commission for the seller which is why it was "popular" for a while there.

Regular life insurance can be bought on top of (or as part of) mortgage protection insurance and gives a payoff if you die. This is to provide for those you leave behind (e.g. Wife and/or kids) who may struggle financially after you die. Remember that even though your mortgage is paid off, nothing else is left to give to your family so this is for them instead of the bank. You can get term insurance (for a fixed time period - e.g. 30 years) or whole of life (covers you as long as you keep paying premium but premium often rises as you get older and more likely to claim). Term insurance is usually better value (for both you and the insurance company) and your financial commitments usually eventual finish later in life anyway (mortgage paid off, kids moved out and independent...etc). Life insurance is mostly useful for those with financial dependents (e.g. Those with a young family). Some jobs and/or pension schemes might have death in service cover which pays out of you die which might be enough so no additional life insurance is necessary. Ultimately whether you want additional life insurance on top of your mortgage protection is really a personal call.

Home insurance is usually for building and contents in case of fire burns down house or burglary or a pipe burst and destroys your stuff... Etc. If you're in an apartment then your block policy might cover your building so could buy contents-only house insurance which will be cheaper. Not compulsory (unless by terms of your lease) but usually cheap so most people have it.
 
Last edited:
BazzaDP said:
mortgage protection insurance is mandatory and pays off the mortgage in full if the worst happens. Mortgage lenders make this mandatory as a term of getting the mortgage so they are protected themselves.
Click to expand...

It's actually the Consumer Credit Act which makes it mandatory and not the lenders.
 
Hi folks,
Thank you for taking the time to clear things up Brendan, Bazza and Monbretia, I was indeed very confused!
Given the fact that the main earner is indeed a public servant and our mortgage is relatively modest I think we’ll cut the payment protection completely, which is indeed pricey at 16 odd euro.
I know of one person who tried to claim the payment protection before and was told they had to be unemployed for three odd months before they could claim (not too sure who it was with).
We will likely change on the mandatory life assurance/mortgage protection, I’ve shopped around online and have a quote for half of the existing quote.
Of the three we’ll likely keep the home/contents insurance as it is needed, is circa 14 euro per month reasonable?
I had a brief look online and can get it with Getcover.ie for around 85 euro per year, and chill/no nonsense are 35-40 euro more expensive.
Any experiences of Getcover.ie?
Thanks for your help folks, because a quick tally up there and we could save the guts of 400 euro per year by shopping around on the contents/mandatory life assurance/mortgage protection and also cancelling the payment protection completely.
 
I spent a time when I was out of work a few years ago. I had a mortgage and had a car loan each with independent repayment protection insurance.

The periods on social welfare exceeded the expected time and I did not claim payments as I wasn't expecting to be out of work for so long. I continued to make my repayments as normal. Can I now claim for that period retrospectively?
 
Highly unlikely, check your policy, you usually have to put the claim in within a set period which is months at most not years.
 
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